A new statement issued by the FCC indicates Chairman Ajit Pai is seeking to prohibit the use of FCC Universal Service Funds to companies that "pose a national security threat to United States communications networks or the communications supply chain." The proposal will be officially voted on during the Commission's upcoming April 17 meeting. Mr. Pai is concerned that key network infrastructure such as routers, switches and such may, in fact, contain hidden backdoor access that would allow foreign governments to spy, steal data, launch DDoS attacks, infect computer systems, and perform other such forms of cyberterrorism and cyberespionage. While he did not go so far as to specify which company or companies might be the cause for concern, the spade of recent news involving the US government and China's Huawei and ZTE are understood to be among them.
The development is of relevance as the money is typically used by smaller local carriers to keep their networks relatively up-to-date with those provided by the major telecoms. As Huawei, in particular, has a plethora of patents and products associated with 4G – and upcoming 5G – network infrastructure, the proposal will effectively make it impossible for small-scale network operators to use government funding to maintain, modernize, or even make their networks with the company's equipment. As such, they will be forced to either secure alternative funding or else make use of hardware that is sanctioned by the federal government. Hardware vendors such as Huawei, meanwhile, could be facing a loss of revenue from this potential change.
Huawei has for years now been the subject of US governmental concern due to a belief that the company may have secret backchannel doors into its hardware – both for infrastructure and consumers – that permit the Chinese government to spy on America. Huawei, however, maintains its innocence, with a representative recently stating that it has a "robust system of cybersecurity assurance and a proven track record". This year alone has seen the US government pressure AT&T to drop the Huawei Mate 10 Pro from its pending launch lineup, and more recently seen skepticism spread internationally: Just last week, it was reported that Australia, Canada, and South Korea are all making efforts to limit Huawei's influence in their markets.